United they stood

The U.S. president’s planned overhaul of Wall Street does not address the fundamental failings of the financial system. This requires regulators to come up with a consistent set of global rules. By going it alone, the U.S. has reduced their chances of success.

Context News

The Financial Stability Board on Jan. 22 welcomed President Obama's plans to reduce risktaking by investment banks. The group of international regulators said the proposals are "amongst the range of options and approaches" the FSB is considering as it attempts to limit the risks posed by financial institutions that are deemed too big to fail.

The FSB said other options being considered included: "targeted capital, leverage, and liquidity requirements; improved supervisory approaches; simplification of firm structures; strengthened national and crossborder resolution frameworks; and changes to financial infrastructure that reduce contagion risks."

But Alistair Darling, Britain's chancellor, warned against introducing new reforms without global coordination. "If everyone does their own thing it will achieve absolutely nothing. The banks are global they are quite capable of organising themselves in such a way that if the regime is difficult in one country they will go to another one, and that doesn't do anyone any good," he told the Sunday Times.

Philipp Hildebrand, chairman of the Swiss National Bank, the country's central bank, welcomed the proposed reforms, which are designed to prevent banks from engaging in proprietary trading. "What is not acceptable is that you have vast, huge risk focused on prop trading narrowly defined that has nothing to do with client business but essentially puts the capital of the bank at risk in a highly leveraged manner," he told the Wall Street Journal.